In the face of Africa’s diverse needs, concessional financing and private investment are key in remaining on track to achieving development goals, Prime Minister Edouard Ngirente, said on Tuesday, May 23.

He was speaking during a high-level presidential dialogue on the changing global financial architecture and the role of multilateral development banks on the margins of the African Development Bank Group’s annual meetings in Sharm el-Sheikh, an Egyptian resort town.

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While African countries are on course to meet their development targets in line with the Sustainable Development Goals, they are also faced with external shocks that are out of control, hence, Ngirente highlighted the significance of south-south cooperation.

"We have to mobilise concessional financing and attract private investments. This means that the government needs public money in concessional financing to de-risk a chain of things in some sectors for the private sector to safely invest in them,” he explained.

According to him, this calls for strengthening financing muscles of multilateral financial institutions, including the AfDB.

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The Vice President of Tanzania, Philip Mpango, said that the current multilateral financing institutions are highly inadequate and need to be aligned more with national priorities and support home-grown private sector interventions.

"We have now a completely new set of challenges facing the globe such as environmental challenges, natural calamities, food insecurity, pandemics, debt dynamics, and geopolitical tensions.”

This, he said, has to be reflected in the financial architecture of which the mission has basically changed as the world’s challenges evolved.

This also speaks to the call made by African leaders to change the IMF’s Special Drawing Rights (SDR) system to strengthen the global financial safety net and make more liquidity available to developing countries.

This is because SDRs are distributed in proportion to existing IMF quotas, which are primarily a function of an economy’s size and relative position in the world economy.

During the 2021 general SDR allocation of $650 billion, high-income countries, which are least likely to require or utilize SDRs, received approximately $450 billion, constituting almost 70 per cent of the total allocation. Africa, with a population exceeding 1.4 billion, received fewer SDRs than Germany, a country with a population of only 83 million.

Leaders stressed that there is an urgent need to reform the global financial and debt architecture to reduce the costs, time and legal complications for debt restructuring for African countries.

Africa will need $1.3 trillion annually to achieve its sustainable development needs by 2030. In addition, Africa requires up to $144 billion a year to recover from the Covid-19 pandemic effects and rebuild economies, African Development Bank President, Akinwumi Adesina, noted.